Population growth statistics paint a rosy future for the construction industry. With the global population predicted to hit 9 billion by 2050 – and two out of every three people living in cities by 2050 – the demand for construction has never been greater.

Worldwide, construction is already one of the largest industry sectors, accounting for more than 11% of global GDP and expected to grow to 13.2% by 2020, according to a 2014 PwC report.

But focusing on this strong demand obscures a more precarious reality. Underlying challenges in productivity, profitability, performance, labour, and sustainability could derail the industry’s growth.

Today, the construction industry is at a crossroads. Companies that address these challenges head-on and re-imagine their business processes will be poised for significant growth. Businesses that fail to take the challenges seriously, however, will face an uphill battle for viability.

Currently, the barriers to entry in construction are low, creating a saturated marketplace with heavy competition. This competition is shrinking profitmargins and constraining essential reinvestment in new technology and better business practices.

Why is productivity stagnation? According to a Construction Owners Association of America (COAA) study, 63% of direct labour time on mega-construction projects is spent waiting for materials and equipment, traveling to the area, taking early breaks, and planning how to do the work.

The opportunities in construction are growing, but so is project complexity. With companies already operating under razor-thin profitmargins, a single production surprise can wipe out profits for the whole company. Design complexity compounds this problem. As designs become larger and require greater efficiency, construction companies struggle to keep up.

The lack of on-time and on-budget projects is telling. According to an Accenturestudy, only 30% of large projects in the energy industry are delivered on budget, and only 15% of projects are completed on time. Worse, the 2015 KPMG Global Construction Survey found that more than half of all construction companies experienced one or more under-performing projects in the previous year.

Prior to the recent recession, the US construction market consisted of two generations: the traditionalists and baby boomers. Now, the workforce has split into four generations: traditionalists, baby boomers, Generation X, and millennials.

This present labour diversification is a challenge because of stark differences in work ethic, attitude, outlook, and behavior between the generations, reports PwC. Traditionalists have nearly all left the workforce and baby boomer retirement is in full swing. Furthermore, the recession drove many skilled craftsmen to leave the industry and never return. By 2020, millennials are expected to represent half of the global workforce– many with little to no experience or interest in the construction industry.

The combination of increasing project complexity and decreasing experience is a risk multiplier, increasing the risk of deliverable delays, quality construction problems, and employee safety concerns.

Climate change and water management are two environmental issues that pose a growing challenge to the construction industry. Achieving targets for global carbon dioxide emissions reduction will be a major challenge for the construction energy in rapidly developing countries like India and China.

[edit] Next steps: Embracing disruption and preparing for the digital future

The construction industry is at an inflection point, analogous to the move from landline telephony to cellular technology. Digital technologies are disrupting the industry, providing new opportunities to address the challenges of poor profitability/productivity, project performance, skilled labour shortages, and sustainability concerns. Digitisation of the construction industry is not a question of if or when—the changes are happening now.

The industrialisation of construction and the application of proven manufacturing technology and best practices will help companies drive reliable outcomes and improve margins. Digitisation will increase productivity, eliminate waste, and mitigate the adverse impact of on-site surprises.

Digitisation will change most everything, including the competitors and the barriers to entry. The end result: a more productive and profitable industry that builds more sustainableassets. Construction companies must take steps now to join the digital future and stay ahead of the competition—or risk being left behind.